{"id":26171,"date":"2023-09-18T12:41:26","date_gmt":"2023-09-18T12:41:26","guid":{"rendered":"https:\/\/nclnet.org\/?p=26171"},"modified":"2023-09-18T12:44:57","modified_gmt":"2023-09-18T12:44:57","slug":"unveiling-the-flaws-in-the-340b-drug-pricing-program-hospitals-medical-debt-and-consumer-struggles","status":"publish","type":"post","link":"https:\/\/nclnet.org\/340b-drug-pricing-program-flaws\/","title":{"rendered":"Unveiling the flaws in the 340B Drug Pricing Program: Hospitals, medical debt, and consumer struggles"},"content":{"rendered":"

\"Sally<\/p>\n

By Sally Greenberg, Chief Executive Officer<\/strong><\/p>\n

In 1992, Congress created the 340B Drug Pricing Program to help ensure vulnerable patients would be able to access medications they need but may not be able to afford. This program provides steeply discounted drugs to health care providers \u2013 mostly hospitals \u2013 serving low-income patients with the intent that the providers would pass those discounts along to patients. Unfortunately, that is not what is happening. The National Consumers League (NCL) is increasingly concerned about this program, especially as it relates to hospitals\u2019 abusive and aggressive debt collection practices, and how those practices lead to consumer medical debt. A recent letter<\/a> from a bipartisan group of Senators underscores hospitals\u2019 role in this growing problem.<\/p>\n

We find it particularly troubling that many hospitals benefiting from 340B are not only nonprofit entities but are designated as charity hospitals \u2013 supposedly caring for low income and indigent patients. A 2022\u00a0report<\/a>\u00a0by the Alliance for Integrity and Reform of 340B found that charity care spending for nearly two-thirds of 340B hospitals was less than the national average\u00a0for similar hospitals. Further, a December 2019 Government Accountability Office (GAO) report<\/a> found that \u201csome nongovernmental hospitals that do not appear to meet the statutory requirements for program eligibility are participating in the 340B program and receiving discounted prices for drugs for which they may not be eligible.\u201d One report<\/a> found that 82% of nonprofit hospitals spent less on community programs than the value of their tax exemptions.<\/p>\n

Consumers are not benefiting from the 340B program in the way Congress intended. A patient whose income is above 200 percent of the Federal Poverty Level (FPL)<\/a> is expected to pay full price for a drug they receive at the hospital, even though the care center from which they are \u201cbuying\u201d the drug did not pay full price for it<\/strong>. Hospitals participating in the 340B program saved an average of $11.8 million per year, according to a 2019 report<\/a> from Beckers Hospital Review, and multiple<\/a> studies<\/a> have found that a majority of hospitals markup medicines between 200-500 percent. Under the current program, an individual who makes $29,200 per year has to pay that price.<\/p>\n

What is even more alarming is the fact that if a patient can\u2019t pay, the hospitals that have benefited enormously from discounted drugs intended for vulnerable patients are aggressively suing these same patients. This illustrates a major disconnect between the intent of the 340B program and the way it is operating today.<\/p>\n

While estimates differ, medical debt is believed to cause more than 60 percent of bankruptcies in America. Most consumers facing medical debt did not end up in that situation because of bad decisions or profligate spending. Most have had some kind of injury or unexpected illness and don\u2019t have insurance \u2013 or don\u2019t have sufficient insurance \u2013 to cover their medical and hospital costs. Patients who need financial assistance should be processed when entering the hospital for medical care. Many are not given the chance to do so and as a result, can be sued for debt after services are rendered. Medical debt collection practices are debilitating for low-income consumers and can destroy their credit ratings, subjecting them to subprime rates and a never-ending spiral of debt.<\/p>\n

Even if patients don\u2019t start out poor, because of excessive fees, penalties, and other costs added onto what may or may not be actual medical debt on the part of patients, aggressive debt-collection practices can leave them destitute. Many don\u2019t have funds to hire a lawyer, and if summoned, they often don\u2019t know they need to actually go to court; in fact, sometimes debt collectors advise them not<\/em><\/strong> to show up in court. As a result, default judgments are filed against them, leading to garnishments of wages, and liens on homes, cars, and other properties. In 2019, the Journal of the American Medical Association<\/a> studied the garnishment of wages by hospitals in the state of Virginia and found that 71% of the hospitals were nonprofit and the gross mean annual revenue of hospitals engaged in garnishments was $806 million, with 8,399 patients having wages garnished.<\/p>\n

Below are just a few stories illustrating hospitals\u2019 medical debt collection practices playing out in communities throughout the nation.<\/p>\n